When it comes to your customer experience strategy, measuring your endeavors is truly essential: obviously you’ll want to know if your assumptions were right and if the customer is indeed happy with your decisions. But the wicked irony with metrics is that they sometimes have the exact opposite effect than the one you intended.
When I read the HBR article “Don’t Let Metrics Undermine Your Business” it confirmed exactly what my gut feeling has been telling me for a while: that a disconnect between your strategy and the metrics that support them can be disastrous. So I wanted to share with you what can go wrong with customer experience metrics, and how you can make sure that it does not happen to you.
The most disastrous example of metrics going bad is perhaps the one of Wells Fargo which had a strategy of building long-term customer relationships. Very commendable, of course. But when they tied a metric of cross-selling to that, this caused many employees to lose sight of the real strategy and instead act according to a falsely perceived “cross-selling strategy”. The result: Wells Fargo employees opened 3.5 million deposit and credit card accounts without customers’ consent and then a horrendous backlash followed, with huge fines, reimbursements, a class-action and lots of customers lost.
What can we learn from this?
Strategy for the masses
Strategy always comes first, and then the metrics. But both should be a company-wide concern. If you have a top down, hierarchical company, your management will probably decide upon the strategy unilaterally, connect metrics to them and then push these towards the workforce, without any input or feedback of the latter. This creates a huge disconnect. Employees will then only ‘see’ the metrics and act upon them, without feeling the need to work towards the strategy. And if they don’t, they will make shortcuts, because that’s just how our brains work.
Let’s say that you would take ‘delivering top quality sustainable products’ as a strategy and then tie a metric of ‘less than 5% returns’ to that. You might expect that your team would gather data about the weak spots of returned products and then deliver this feedback to your engineers who could then improve them, which would result in less returns. That could happen, right? But if your team is working towards the metric instead of the strategy, this following scenario would be far more likely: your service team could decide to make the return policy and process so complex, difficult and hard to find that the rate of returns would indeed plummet. This would be a very ‘clever’ shortcut of your service team, but the result would be a lot of frustrated customers and a dangerous informational blindness about the blind spots in your products.
These are exactly the type of situations that can be avoided if employees are involved in the strategy from the get go and if you decided upon the metrics together.
Reward and punishment
But a disconnect between your strategy and metrics is not the only challenge. The problem becomes even worse if you tie punishments and rewards to the metrics, causing an even bigger strategy-myopia. It’s exactly what happened at Wells Fargo: sales people were deeply incentivized to cross-sell and when they did not meet their quota, they were punished. This caused their metrics-obsession to become even bigger.
But their HBR article, Harris and Tayler, also gave the positive example of Intermountain Healthcare. Its goal was to provide high-quality, low-cost care and it developed a strategy of reducing unnecessary interventions for lower back-pain problems. For the non-healthcare expert readers among you: for lower back-pain, the best response is to wait because it often goes away after a few weeks and procedures and medication can sometimes just as much hurt as they can help.
To measure their strategy of reducing unnecessary interventions, Intermountain began tracking whether doctors waited at least four weeks after meeting with a patient with lower back pain to recommend an X-ray, MRI, or another treatment. You might see how this could easily backfire.
But, luckily, Intermountain had a very different approach than Wells Fargo. First of all, because the Intermountain doctors helped develop the strategy, they never lost sight of the latter in favour of short-cutting the metrics they received. Secondly, compensation was never tied to the metric so that it would never become more important than the strategy. And on top of that, Intermountain assessed the performance of its physicians with a lot of different metrics: patient satisfaction, condition-specific quality metrics, health outcomes, preventive efforts, and total cost of care.
Intermountain proved that the right mix of strategy, metrics, incentives and rewards can work, if you go about it deliberately and carefully. But what about you? Is your customer experience strategy closely tied to its metrics, or is there a disconnect? Is your team working hard in function of your strategy or ‘only’ in function of its metrics? It could be time to do some soul searching.
This article originally appeared on his blog.
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